JP: Unemployment Rate

March 30, 2017 06:30 CDT

Consensus Actual Previous
Level 3.0% 2.8% 3.0%

Japan's unemployment rate fell to 2.8 percent in February from 3.0 percent in January, below the consensus forecast of 3.0 percent. This is the lowest official unemployment rate Japan has seen since the mid-1990s

The number of employed persons in January was up 510,000 (0.8 percent) compared with the same month last year, while the number of unemployed persons has fallen by 250,000 (11.7 percent) over this period. Japan's participation rate also fell from 60.0 percent in January to 57.9 percent in February.

Today's data shows that Japan's labour market has continued to strengthen, though it appears that the drop in unemployment is partly driven by a lower level of participation in the labour market. Strong growth in employment is also providing a boost to consumer purchasing power, with other data published today showing household real incomes rose 0.7 percent year-on-year in February. Officials at the Bank of Japan have pointed to recent improvement in the labour market as one of the factors supporting their view that inflation will start to rise once the impact of lower oil prices fades.

The Unemployment Rate measures the number of unemployed as a percentage of the labor force. The unemployment rate is part of the Labour Force Survey which also includes employment data.

The unemployment rate and employment change are carefully monitored. The employment data show the number employment along with the change in employment for the previous year. Monthly changes in employment also help clarify whether businesses are hiring. The unemployment rate is the percentage of the labor force that is unemployed. A lower jobless rate translates into more income earning workers and greater consumption. Increased spending is a positive for consumer oriented economic growth, something that has lagged in Japan.

By tracking the jobs data, investors can sense the degree of tightness in the job market. If wage inflation threatens, it's a good bet that interest rates will rise; bond and stock prices will fall. No doubt that the only investors in a good mood will be the ones who watched the employment report and adjusted their portfolios to anticipate these events.